Week Ending June 8, 2012
Bush Tax Cut Maneuvering Heats Up
Although the Bush-era tax cuts don’t expire until the end of the year, a number of people are talking about the need to make a decision on them sooner rather than later. This lost federal revenue is primarily benefitting wealthy individuals and large corporations and has contributed mightily to the federal budget deficit. Former President Bill Clinton said in a CNBC interview this week, “It’s pretty obvious that the economy needs the certainty of the extension of the current tax rates for at least a year.” Clinton later equivocated a bit, but Senate Minority Leader Mitch McConnell (R-KY) wasted no time capitalizing on Clinton’s statement, insisting that Congress extend all the Bush tax cuts, including for the wealthy. A number of Democrats including President Obama have reiterated their support for allowing the tax cuts for the wealthy to expire. His spokesperson said, “we should not extend and he will not extend the tax cuts, the Bush-era tax cuts, for the wealthiest 2% of the American people.” GOP House leaders are working on a bill to extend all the tax cuts for at least a year. A vote is expected in the House in July.
Senate Moves Forward on Farm Bill Reauthorization
By a vote of 90 to 8, the Senate voted to proceed to consider a five-year farm bill reauthorization (S. 3240), which includes policy and funding for nutrition and agriculture programs. The bill as passed by the Agriculture Committee includes a $4.5 billion cut over 10 years to the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps). Sen. Kirsten Gillibrand (D-NY) is building support for her amendment which would replace the proposed SNAP cuts with reductions in federal subsidies to the crop insurance program. Sen. Richard Durbin (D-IL) is expected to offer an amendment that would also limit federal subsidies for crop insurance premiums. On average, the federal government pays 60% of a farmer’s crop insurance premiums, with no limits on premium payments. On the Senate floor, Sen. Durbin said it is reasonable “to ask the wealthiest and most prosperous farmers to pay a little more for their crop insurance.” Sens. Rand Paul (R-TN) and Lindsey Graham (R-SC) have proposed amendments to covert SNAP, into a block grant to states, and Sen. Jeff Sessions (R-AL) has several amendments that would weaken SNAP including onerous immigration status verification requirements, repealing states’ performance bonuses, and limiting categorical eligibility.
Possible Breakthrough on Offsets to Prevent Doubling of Student Loan Interest Rate
On Thursday, Senate Majority Leader Harry Reid (D-NV) offered two bipartisan proposals to House and Senate GOP leaders to pay for a one-year extension of student loan rates to prevent them from doubling on July 1. The first would create a more flexible approach for employers to compute their pension liabilities which would result in businesses taking fewer tax deductions. The second would increase premiums paid by employers for the insurance provided by the Pension Benefit Guaranty Corporation. Congressional GOP leadership has not rejected these proposals, a possible good sign toward reaching an agreement. In late April, the House voted 215-195 to a one-year extension bill (H.R. 4628) that eliminates the preventive health care fund in the Affordable Care Act. Senate Democratic leadership rejected that approach. If Congress is unable to pass a bill, the interest rate will double in less than one month for the seven million students expected to take out loans for the upcoming school year
House Committee Approves Workforce Investment Act (WIA) Bill
The House Education and The Workforce Committee voted 23 to 15 along party lines to approve legislation that substantially changes the Workforce Investment Act (WIA). Originally established in 1998, Congress has been unable to agree on any subsequent legislation regarding the program since then because of major ideological differences. This time was no different.
The Workforce Investment Improvement Act of 2012 (H.R. 4297), sponsored by Rep. Virginia Foxx (R-NC), would end the WIA adult, dislocated and youth programs along with the Wagner-Peyser state employment services and replace them with a “workforce investment fund” over which state governors would have substantial control. It also allows governors, with federal approval, to merge into this fund a long list of other programs, including state unemployment insurance, trade adjustment assistance, and TANF programs. By block granting these programs, the bill would set the stage for future federal funding reductions and eliminate all existing federal rules governing them. The legislation also strips organized labor from participating in the system and requires that business representatives make up two-thirds of state and local workforce boards instead of the current simple majority. As written, the workforce boards could consist entirely of business representatives.
Committee Democrats offered a complete substitute (H.R.4227), but it was defeated. In contrast with the Republican bill, H.R. 4227 would have strengthened the existing system in a number of important ways while maintaining the current programs and funding streams. It would have established separate funding for local one-stop operations, required the establishment of career pathways, strategies and initiatives, eliminated the current sequence of services policy, designated a specific portion of WIA funding for training, and promoted innovation in a variety of ways including creating a new pilot program proposed by AFSCME to strengthen state employment service operations and upgrade the skills of state staff.
It is not clear when H.R. 4297 will go to the House floor, but the committee’s extreme action makes it unlikely that Congress will adopt WIA legislation this year.
Senate Fails to Move Forward on Pay Equity Bill
On Tuesday, GOP Senators blocked consideration of a bill that would provide additional tools to enforce existing law against gender-based pay discrimination, protect employees from retaliation for discussing wage information with each other, and allow women to sue for punitive damages in discrimination cases. The vote was 52-47, short of the 60 votes needed to proceed to debating and voting on the legislation (S. 3220). The White House issued a statement before the procedural vote expressing support for the bill. President Obama noted that it would strengthen the 1963 Equal Pay Act, “and would give women the tools they need to fight pay discrimination.” According to a recent study by the American Association of University Women, women earn 77 cents for every dollar men earn.
House Holds Yet Another Vote Aimed at Undermining Health Reform
On Thursday, the House voted for a bill (H.R. 436) to repeal a tax on medical devices that will help fund the expansion of health care coverage under the Affordable Care Act (ACA). The bill makes up for the 10-year loss of $29 billion in tax revenue by penalizing working families who receive tax credits to purchase health insurance and later experience an improvement in their financial situation through a new job, marriage or other event. The vote was largely along party lines, 270 to 146, with all Republicans voting for it. All but 37 Democrats voted against it.
Under the ACA, taxes were established on a number of industries that will benefit from the law by gaining millions of new customers, including hospitals, clinical laboratories, insurance companies and drug companies as well as manufacturers of medical devices. While other industries worked with Congress and the President to make a contribution to funding the law, the medical device industry has fought the tax every step of the way.
H.R. 436 is another in a series of bills that House GOP leaders have moved in order to defund and undermine the ACA. In this case, it is estimated that many individuals and families will forgo health coverage and instead pay the limited penalty for failing to get coverage rather than risk a much larger penalty should they be required to reimburse the government for the full amount of the tax credit.
House Subcommittee Approves Funding Cuts for Health Care and Financial Reform
The House Financial Services and General Government Subcommittee approved its funding bill for FY 2013 by voice vote, but with significant cuts to two Obama administration priorities — implementation of both the ACA and the Dodd-Frank Financial Reform Act. The bill overall cuts $376 million from fiscal 2012 funding levels and contains $2 billion less funding than President Obama’s request for the programs and services under the subcommittee’s jurisdiction.
The bill would underfund the ACA by prohibiting transfers of funds between the Department of Health and Human Services and the IRS, which would hamper implementation of health reform. The House GOP leadership made a similar effort last year, but it did not survive negotiations with the Senate. The Senate is expected to oppose the provision again when it takes up this funding bill next week. A similar goal of the GOP leadership is to limit the implementation of the Dodd-Frank financial reform law designed to protect consumers. The bill also underfunds and places restrictions on spending by the Securities and Exchange Commission (SEC), which has been given new regulatory authority.
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